My mother passed away on 9-14-04. She left paperwork on a loan she made to my neice wich included original money order with the word loan written under my neice's name. The loan was for 2,000.00 in a savings acct. in which my niece would deposit and my mother would withdraw. This had been going on for 3 years.


As soon as you read this call a probate or estate planning attorney in your area and find out what needs to be done with your mother's estate. There can be critical time deadlines that may have a major impact an many aspects of her estate and you don't want to risk missing them (you may have!). Get help quick. This might be no more than a quick consultation to be sure you're on track. Don't be penny wise and pound foolish, as the old saying goes.

The facts of the rest of your question aren't clear so its tough to answer, but here's some thoughts (and maybe what your looking for):

  • Was the transaction with the neice really a loan? The notation "Loan" may or may not suffice to create a loan. If everyone involved agrees with you and takes the moral high road to "do what's right" then whether or not the loan is valid under state law (which will depend on your state's rules) won't matter as everyone will respect it. However, even if they do, that doesn't mean the IRS will (or your state's tax authorities) if there are any tax implications (for $2,000 there may not be any). Mots loans include statements as to interest rate, maturity date, payment terms, not just the amount borrowed. So its possible the "loan" notation won't suffice. You might wish to go to your state's website and look up "loan" or "note" and see if you can spot the legal requirements for a loan. While consulting a lawyer is always the best option, the cost may be prohibitive for a $2,000 issue (maybe the practical answer is cutting a deal with the neice).
  • If your neice put the $2,000 into an account and your mother withdrew the money, it would be as if your mother was taking back the money she loaned, and paying down the loan. Is that what you meant?
  • Your comment that this arrangement has been going on for years seems to imply that there may be many of these transactions. If you are the executor you have a fiduciary responsibility to figure out if these transactions were loans, how much was "loaned" and if you can get the money back. If you're the only heir, this may really just be an issue of your money. However, if you have siblings, or there are other heirs, you owe them the duty (if you're exeuctor or personal administrator) to be sure you've done your job correctly. If you don't they could hold you liable. Again, hard to comment, not enough facts.
  • Given the confusion of facts, and some of the issues outlined, you may really be better off getting a quick consultation with an attorney in your area.

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